Compute the total and annual returns on the described investment.
Six years after buying 150 shares of XYZ stock for ​$60 per​ share, you sell the stock for $14,400.
Question content area bottom
Part 1
The total return is enter your response here​%. 
​(Do not round until the final answer. Then round to one decimal place as​ needed.)
Part 2
The annual return is . 
​(Do not round until the final answer. Then round to one decimal place as​ needed.)

Let's break the problem into two parts: calculating the **total return** and then the **annual return**.

### Part 1: Total Return

The total return is given by the formula:

\[
\text{Total Return} (\%) = \left( \frac{\text{Final Value} - \text{Initial Value}}{\text{Initial Value}} \right) \times 100
\]

#### Step 1: Initial Value
You bought 150 shares at $60 per share:

\[
\text{Initial Value} = 150 \times 60 = 9000 \, \text{USD}
\]

#### Step 2: Final Value
You sold the shares for $14,400, so the **Final Value** is $14,400.

#### Step 3: Calculate Total Return
Now, substitute the values into the total return formula:

\[
\text{Total Return} = \left( \frac{14400 - 9000}{9000} \right) \times 100
\]

I'll calculate that next.

### Part 2: Annual Return

The annual return can be calculated using the formula for the compound annual growth rate (CAGR):

\[
\text{Annual Return} (\%) = \left( \left( \frac{\text{Final Value}}{\text{Initial Value}} \right)^{\frac{1}{n}} - 1 \right) \times 100
\]

where:
- $ \text{Final Value} = 14400 $
- $ \text{Initial Value} = 9000 $
- $ n = 6 $ (the number of years)

Now let's calculate both the total return and the annual return.### Part 1: Total Return
The total return is **60.0%**.

### Part 2: Annual Return
The annual return is approximately **8.1%**.

Would you like any more details or further clarification?

Here are 5 related questions to consider:
1. What factors could affect the annual return on investments?
2. How does compounding impact the annual return over different periods?
3. What is the difference between simple interest and compound interest in long-term investments?
4. How does stock price volatility affect potential total returns?
5. How can you assess the risk of an investment based on its historical returns?

**Tip:** Always factor in inflation when assessing the real value of your investment returns over time.

Compute the total and annual returns on the described investment. Six years after buying 150 shares of XYZ stock for ​$60 per​ share, you sell the stock for $14,400. Part 1: The total return is __%. (Do not round until the final answer. Then round to one decimal place as​ needed.) Part 2: The annual return is __%. (Do not round until the final answer. Then round to one decimal place as​ needed.)

Learn how to calculate the total and annual returns on an investment of 150 shares of XYZ stock bought at $60 per share and sold for $14,400 after 6 years. Understand key financial formulas like total return and compound annual growth rate (CAGR). Suitable for Grades 10-12.

Math Problem Statement

Solution

Ask a new question for Free

By Image

Math Problem Analysis

Mathematical Concepts

Formulas

Theorems

Suitable Grade Level

Related Recommendation